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The National
a day ago
- Politics
- The National
Cancel Aukus? The silver linings if Australia's $239 billion submarine deal with the US gets scrapped
When Aukus, the trilateral security partnership between Australia, the UK, and the US, was announced in 2021, the then Australian prime minister Scott Morrison hailed it as 'an historic opportunity for the three nations, with like-minded allies and partners, to protect shared values and promote security and prosperity in the Indo-Pacific region.' Under the deal the US would provide Canberra with three to five Virginia-class nuclear-powered submarines, with delivery from 2032 onwards, while Australia would be able to build its own version of a new British 'Aukus' submarine by the early 2040s. Not everyone was convinced. In 2023, the former Australian prime minister Paul Keating called the $239 billion plan the 'worst deal in all history' and said, 'the proposal is irrational in every dimension'. Last year, a former foreign minister, Gareth Evans, said that 'Australia's no-holds-barred embrace of Aukus is more likely than not to prove one of the worst defence and foreign policy decisions our country has made,' and put its sovereign independence 'at profound risk'. The agreement is currently under a 30-day review by the Trump administration, and since it is being led by US Under Secretary of Defence for Policy Elbridge Colby, a known Aukus-sceptic, the deal may well be scuttled. Here's why I think that would be a positive move, and why other countries should take notice if it does unravel. Australia previously had a far cheaper deal with France to supply 12 submarines, and when Canberra abruptly cancelled the deal the French were livid, with Foreign Minister Jean-Yves Le Drian describing it as 'a stab in the back'. To be fair, it had been subject to delays. Nevertheless, the arrival time of the Aukus subs is lengthy, to put it mildly. I've talked about this several times with a friend who was a longstanding member of the Australian Government's Foreign Affairs Council, and we agreed that 'you'd better be careful with us, we've got some top-grade submarines coming in, er, nearly 10 to 20 years' was not the greatest of deterrents to a would-be aggressor. For Australia, the only sensible path is to try to build an Asia-Pacific security architecture that includes China The Aukus submarines are also too big. Concerns have been raised about how they would operate in Australia's shallow coastal areas. Mr Keating was clear. The new subs were, he said, 'designed to attack in China's peripheral waters'. The purpose of Aukus, in his view, was to tie Australia 'unambiguously, unqualifiedly and solely arraigning itself' to the most China-hawkish of American positions, and the agreement constituted 'the last shackle in the long chain the United States has laid out to contain China'. Quite apart from the issue of sovereignty – it is almost certain Australia will not be able to use these subs without 'interoperability' with America – it is unclear if they're ever going to arrive. Another former Australian foreign minister, Bob Carr, is sure of it. 'The evidence is mounting that we're not going to get Virginia-class subs from the United States,' Mr Carr said in March, 'for the simple reason they're not building enough for their own needs and will not, in the early 2030s, be peeling off subs from their own navy to sell to us'. This is partly a matter of law. Before transferring any submarines to Australia, the US president must certify that this would not diminish American naval capability. Mr Colby has publicly expressed doubts on this front. But it's also a matter of inclination. The Department of Defence has said that the review is to ensure 'that this initiative of the previous administration is aligned with the president's 'America first' agenda'. We know that 'America first' considers itself to be unbound by anything, including international law – as the Trump administration's strikes on Iran showed. Assuming 'America first' continues to be the guiding ideology of a possible JD Vance presidency in the future, why should it keep to the Aukus agreement if it is not deemed in the US's best interests? So, I agree with Mr Keating and Mr Evans. Their country is best out of it, and Mr Colby's review 'might very well be the moment Washington saves Australia from itself', as Mr Keating put it. The broader point to be taken from this is that many countries need to be thinking about taking care of themselves, including seeking more collective security, rather than relying on an America safety net that may not be there if push comes to shove. For Australia, the only sensible path is to try to build an Asia-Pacific security architecture that includes China. For Europe, it means looking further ahead of the current war on the continent and imagining Russia as a common neighbour, not an enemy. And for the Middle East, if Mr Trump could assist the creation of a region in which Israel, a Palestinian state, and Iran all live in peace, he would deserve the Nobel prize that he covets. For now, however, the US President may think he's pulled off a brilliant manoeuvre in terms of Iran and Israel, but his contradictory behaviour inevitably unnerves other countries, some allies perhaps especially so. On the other hand, if they need to stand on their own feet rather more in the future, that may not be a bad thing – even if it's a consequence of 'America first' in all its stark reality. It's a lesson Australia is learning. Other countries should take note.
ABC News
2 days ago
- Business
- ABC News
Jim Chalmers will have to juggle competing demands to secure tax reform
Next week will be the 40th anniversary of the Hawke government's tax summit. Dominated by then treasurer Paul Keating's unsuccessful bid to win support for a consumption tax, it was the public centrepiece of an extraordinary political and policy story. That story was about the possibilities for, but constraints on, bold reform; how a determined treasurer can muster a formidable department to push for change, and the way the ambitions of a minister can clash with the pragmatism of a prime minister. Ken Henry, later secretary of the treasury, was then part of what they dubbed the "treasury tax reform bunker". He kept a timesheet, averaging 100 hours work a week for a three-month period. Officials brought sleeping bags and their small children (Henry's were aged three and five) into the office. Before the summit, the government produced a comprehensive draft white paper. Keating battled to keep the conflicting interests "in the cart" for his blueprint. But the four-day summit, attended by business, unions, premiers and community groups, was inevitably divided by stakeholders' self-interests. In particular, the unions couldn't wear Keating's consumption tax, and Bob Hawke kiboshed it unceremoniously. Keating, who had to settle for a more limited but still very significant set of reforms, was furious with Hawke, and it left a fracture in their relationship. Jim Chalmers was aged seven in 1985. But he's a student of Keating (he did his PhD on his prime ministership) and you can be sure he's boned up on what went right and wrong in that tax reform exercise. Now he is preparing for the government's August 19-21 "roundtable" and his own bid at major tax reform. The roundtable, as first announced, focused on "productivity", and that will be central. But Chalmers has taken to calling it an "economic reform" roundtable — its brief also includes budget sustainability and resilience — and he is effectively putting tax reform close to its heart, or at least letting others do so. After all, a fit-for-purpose tax system is one key to improving productivity. The roundtable (for which invitations to business and the union movement are now going out, with more to follow) is nothing like on the scale, in size (the summit had about 160 attendees, the roundtable will have about 25) or preparation, of the elaborate 1985 conference. And crucially, while that summit was the culmination of a process, Chalmers is using the roundtable to kick off a process. Chalmers is lowering expectations in regard to specific outcomes on tax from the roundtable. While those might be obtainable on some productivity issues, on tax he is likely to look for broad support for a direction of reform. For instance, is there a general appetite for reshaping the tax system towards lower personal and company tax, offset by higher taxes on certain investments and savings? ` Most tax experts argue Australia's system is too skewed towards taxing income rather than spending. This leads to calls to increase or broaden the GST, financing cuts to personal income tax. Chalmers has been a long-term opponent of changing the GST, but he says he is not ruling the GST out for discussion at the roundtable. (That's a contrast to when Prime Minister Kevin Rudd, commissioning Henry to lead a major tax review, excluded the GST from its terms of reference.) Almost certainly, however, it would not be possible to get "consensus" from business and unions for GST changes. Not least of the constraints is that compensating the losers in such a change is very expensive and there is not the money to do so these days. That immediately limits the extent of reform. Henry tells The Conversation's podcast that if he were designing a tax reform package "I'd be looking at opportunities to broaden the GST and maybe to increase the rate as well". But "I do think it is possible to achieve major tax reform […] without necessarily increasing the [GST] rate or extending the base". Henry's (non-GST) wish list includes getting rid of the remaining state transaction taxes, such as stamp duty on property conveyancing. Notably, he argues for extracting more revenue from taxing natural resources and land, and also from taxing pollution from various sources. "We're going to need to tax those things more heavily if we're going to relieve the tax burden on young workers through lower personal income tax and introducing tax indexation." Henry is particularly focused on the unfair burden at present put on these younger taxpayers. He has come around to the idea of income tax indexation as one means of assisting them. A system more geared to younger workers raises immediate questions about the present generous treatment of superannuants. Chalmers is already caught in that hornets' nest with his proposed changes for those with balances more than $3 million. To what extent will the roundtable tax debate revive the issues of negative gearing and the capital gains tax discount? The government hosed down before the election the prospect of any changes to negative gearing this term. Chalmers, however, had work done on this last term and he would likely favour reining it in. But would this be a bridge too far for the prime minister? Indeed, where will Anthony Albanese's limits be when it comes to reform? Would he only support changes that had strong consensus? And how far would he feel constrained in going beyond what he considers he has a mandate for? If Chalmers stays serious about the tax push, it is going to take many months of intense work. It can't be rushed, but nor can it be delayed. If it ran for much over a year it would likely find the government's political capital had been eroded. The size of its capital store can appear deceptive because so much of it is thanks to Peter Dutton and Donald Trump. In 2022, the Liberals boycotted Labor's jobs and skills summit (although Nationals leader David Littlepround attended). This time, shadow treasurer Ted O'Brien has accepted Chalmers' invitation and will participate in the roundtable. It will be a tricky gig for O'Brien, new to this shadow portfolio. He has to avoid being too negative, but nor can he endorse things the opposition might later reject. The Coalition will not have a tax policy against which to judge what's said. The occasion will be a chance for O'Brien to make contacts and get more insight into stakeholders' views on the key economic debates, much wider than just tax. Importantly, however, O'Brien will need to remember judgements will be being made about him by other participants in the room. Business in particular will be seeking to get a fix on whether opposition leader Sussan Ley's declarations about wanting to be constructive where possible are fair dinkum. Michelle Grattan is a professorial fellow at the University of Canberra and chief political correspondent at The Conversation, where this article first appeared.
The Advertiser
5 days ago
- Business
- The Advertiser
Australia has to stop being so dumb or things will get out of control
Australia now faces four blindingly obvious national pitfalls which, if not met full on, will cause us to tumble into something resembling what Paul Keating called a banana republic. Keating's was a good wake-up call which worked at the time, and we need another one. The four pitfalls that need an urgent recalibration are as follows. Unsustainable international trade; a wobbly defence-security position; public-finance arrangements that fuel massive inequality and intergenerational unfairness; and out-of-control immigration. Let's outline the festering sores first. International trade: At present Australia exports about $140 billion of low-grade iron ore; $80 billion in LNG; $40 billion worth of coal, three-quarters of which is poor brown coal used to generate electricity. Very little tax is paid, and foreign shareholders get most of the benefit. And we import $30 billion plus in refined fossil fuel. Long-term this is disastrous. As the world realises that there is a sun in the sky that delivers energy free, our coal will become worthless. As the world, ever steel-dependent and energy-aware, realises that low-grade iron ore is not worth the transport costs of importing it, we will have to work out a way to refine it here: use it or lose it. Importing $30 billion worth of fuel is silly when we have the technology and the roof and ground space to generate all the power needed to drive vehicles without any fuel. This transition should happen as quickly as possible. Defence-security: Australia has always been on the apron strings of Britain or the US. As Britain withdrew to its own in 1942 after the fall of Singapore, we turned to the US. Now the US is withdrawing to its own. Neither of them gave two hoots about Australia. Give us your bodies and money for our wars is all they wanted. At present, we are committed to a $350-billion-plus program to develop over more than a decade a handful of nuclear-powered submarines and in the meantime to obtain two or three Virginia-class second-hand ones from the US. Yes, Virginia, there is a Santa Claus, but only for America. We have already paid the US $500 million with no submarine in sight, or ever likely to be. This is because we were dumb enough to sign up to a deal, AUKUS, which allows the US not to deliver any submarines without any penalty through a get-out clause. How many lemons do we have to buy from this used-car salesman (Vietnam, Afghanistan, Iraq) before we realise that we are being dudded and become more self-reliant. Under AUKUS, the British are supposed to design and jointly build the new AUKUS-class nuclear-powered submarine. But Britain is struggling to maintain and replace its nine Astute and Vanguard class nuclear submarines with the new Dreadnought class. Another new class, AUKUS, is more a pipedream than a pipeline. $350 billion for eight pieces of metal under the sea. is so dumb. Ukraine drove the whole Russian fleet out of the Black Sea with some homemade drones. Worse, the US is pressing us to commit to spending 3.5 per cent of GDP on defence and to commit to join in any war with China over Taiwan. We are paying for submarines we do not need with money we do not have to fight enemies that we need not provoke. This unreliable US president who does not share our values should cause us to rethink the America alliance. What we need is enough weaponry to ensure that a potential invader would get such a bloodied nose as to deter them - a purely defensive posture. Public finance: Australia's tax system is an inequitable quagmire. People using their labour get taxed around 30 per cent. People with capital earnings pay a lot less or next to nothing. Treasurer Jim Chalmers to his credit has convened a productivity summit. He cited the book Abundance by US journalists Ezra Klein and Derek Thompson which described how notionally progressive environmental and social-cause regulation was clogging the provision of affordable housing. Yes, progressives should be concerned that over-regulation can stifle the very ends that want. But the Abundance was more than that. It also argued that we could have abundance (of cheap or free energy) if over-regulation of the construction of renewables and sabotage by the fossil industry were removed. They argued that the broad masses could also have abundance if the ultra-wealthy paid more tax. Chalmers has also flagged tax reform. It is a good start. We do not want capitalists salivating at the thought of deregulation and ignoring tax reform. We have been there before and there has been no abundance or trickle down for those below. Immigration: Australia should drastically reduce its immigration program. The level of immigration has nothing to do with race because Australia has a non-racial immigration program, so whatever way you change the numbers - up or down - race has nothing to do with it. READ MORE: It is about economics, the environment, and quality of life. In the 2023-24 financial year, Australia's net overseas migration was 446,000 people. This is the main reason we have a housing crisis; congestion; and an infrastructure crisis generally. Our universities are less places to educate and train our people than factories to sell overseas students tickets to permanent residency - headed by CEOs on million-dollar salaries. In summary, Australia has to stop being so dumb and stop giving so much away - untaxed resources; money to the US and British military-industrial complex; tax breaks and avoidance schemes for the uber-wealthy; an out-of-control migrant intake; and allowing the fossil industries to expand and profit as if there is no climate crisis or a cheaper and better renewable alternative. Australia now faces four blindingly obvious national pitfalls which, if not met full on, will cause us to tumble into something resembling what Paul Keating called a banana republic. Keating's was a good wake-up call which worked at the time, and we need another one. The four pitfalls that need an urgent recalibration are as follows. Unsustainable international trade; a wobbly defence-security position; public-finance arrangements that fuel massive inequality and intergenerational unfairness; and out-of-control immigration. Let's outline the festering sores first. International trade: At present Australia exports about $140 billion of low-grade iron ore; $80 billion in LNG; $40 billion worth of coal, three-quarters of which is poor brown coal used to generate electricity. Very little tax is paid, and foreign shareholders get most of the benefit. And we import $30 billion plus in refined fossil fuel. Long-term this is disastrous. As the world realises that there is a sun in the sky that delivers energy free, our coal will become worthless. As the world, ever steel-dependent and energy-aware, realises that low-grade iron ore is not worth the transport costs of importing it, we will have to work out a way to refine it here: use it or lose it. Importing $30 billion worth of fuel is silly when we have the technology and the roof and ground space to generate all the power needed to drive vehicles without any fuel. This transition should happen as quickly as possible. Defence-security: Australia has always been on the apron strings of Britain or the US. As Britain withdrew to its own in 1942 after the fall of Singapore, we turned to the US. Now the US is withdrawing to its own. Neither of them gave two hoots about Australia. Give us your bodies and money for our wars is all they wanted. At present, we are committed to a $350-billion-plus program to develop over more than a decade a handful of nuclear-powered submarines and in the meantime to obtain two or three Virginia-class second-hand ones from the US. Yes, Virginia, there is a Santa Claus, but only for America. We have already paid the US $500 million with no submarine in sight, or ever likely to be. This is because we were dumb enough to sign up to a deal, AUKUS, which allows the US not to deliver any submarines without any penalty through a get-out clause. How many lemons do we have to buy from this used-car salesman (Vietnam, Afghanistan, Iraq) before we realise that we are being dudded and become more self-reliant. Under AUKUS, the British are supposed to design and jointly build the new AUKUS-class nuclear-powered submarine. But Britain is struggling to maintain and replace its nine Astute and Vanguard class nuclear submarines with the new Dreadnought class. Another new class, AUKUS, is more a pipedream than a pipeline. $350 billion for eight pieces of metal under the sea. is so dumb. Ukraine drove the whole Russian fleet out of the Black Sea with some homemade drones. Worse, the US is pressing us to commit to spending 3.5 per cent of GDP on defence and to commit to join in any war with China over Taiwan. We are paying for submarines we do not need with money we do not have to fight enemies that we need not provoke. This unreliable US president who does not share our values should cause us to rethink the America alliance. What we need is enough weaponry to ensure that a potential invader would get such a bloodied nose as to deter them - a purely defensive posture. Public finance: Australia's tax system is an inequitable quagmire. People using their labour get taxed around 30 per cent. People with capital earnings pay a lot less or next to nothing. Treasurer Jim Chalmers to his credit has convened a productivity summit. He cited the book Abundance by US journalists Ezra Klein and Derek Thompson which described how notionally progressive environmental and social-cause regulation was clogging the provision of affordable housing. Yes, progressives should be concerned that over-regulation can stifle the very ends that want. But the Abundance was more than that. It also argued that we could have abundance (of cheap or free energy) if over-regulation of the construction of renewables and sabotage by the fossil industry were removed. They argued that the broad masses could also have abundance if the ultra-wealthy paid more tax. Chalmers has also flagged tax reform. It is a good start. We do not want capitalists salivating at the thought of deregulation and ignoring tax reform. We have been there before and there has been no abundance or trickle down for those below. Immigration: Australia should drastically reduce its immigration program. The level of immigration has nothing to do with race because Australia has a non-racial immigration program, so whatever way you change the numbers - up or down - race has nothing to do with it. READ MORE: It is about economics, the environment, and quality of life. In the 2023-24 financial year, Australia's net overseas migration was 446,000 people. This is the main reason we have a housing crisis; congestion; and an infrastructure crisis generally. Our universities are less places to educate and train our people than factories to sell overseas students tickets to permanent residency - headed by CEOs on million-dollar salaries. In summary, Australia has to stop being so dumb and stop giving so much away - untaxed resources; money to the US and British military-industrial complex; tax breaks and avoidance schemes for the uber-wealthy; an out-of-control migrant intake; and allowing the fossil industries to expand and profit as if there is no climate crisis or a cheaper and better renewable alternative. Australia now faces four blindingly obvious national pitfalls which, if not met full on, will cause us to tumble into something resembling what Paul Keating called a banana republic. Keating's was a good wake-up call which worked at the time, and we need another one. The four pitfalls that need an urgent recalibration are as follows. Unsustainable international trade; a wobbly defence-security position; public-finance arrangements that fuel massive inequality and intergenerational unfairness; and out-of-control immigration. Let's outline the festering sores first. International trade: At present Australia exports about $140 billion of low-grade iron ore; $80 billion in LNG; $40 billion worth of coal, three-quarters of which is poor brown coal used to generate electricity. Very little tax is paid, and foreign shareholders get most of the benefit. And we import $30 billion plus in refined fossil fuel. Long-term this is disastrous. As the world realises that there is a sun in the sky that delivers energy free, our coal will become worthless. As the world, ever steel-dependent and energy-aware, realises that low-grade iron ore is not worth the transport costs of importing it, we will have to work out a way to refine it here: use it or lose it. Importing $30 billion worth of fuel is silly when we have the technology and the roof and ground space to generate all the power needed to drive vehicles without any fuel. This transition should happen as quickly as possible. Defence-security: Australia has always been on the apron strings of Britain or the US. As Britain withdrew to its own in 1942 after the fall of Singapore, we turned to the US. Now the US is withdrawing to its own. Neither of them gave two hoots about Australia. Give us your bodies and money for our wars is all they wanted. At present, we are committed to a $350-billion-plus program to develop over more than a decade a handful of nuclear-powered submarines and in the meantime to obtain two or three Virginia-class second-hand ones from the US. Yes, Virginia, there is a Santa Claus, but only for America. We have already paid the US $500 million with no submarine in sight, or ever likely to be. This is because we were dumb enough to sign up to a deal, AUKUS, which allows the US not to deliver any submarines without any penalty through a get-out clause. How many lemons do we have to buy from this used-car salesman (Vietnam, Afghanistan, Iraq) before we realise that we are being dudded and become more self-reliant. Under AUKUS, the British are supposed to design and jointly build the new AUKUS-class nuclear-powered submarine. But Britain is struggling to maintain and replace its nine Astute and Vanguard class nuclear submarines with the new Dreadnought class. Another new class, AUKUS, is more a pipedream than a pipeline. $350 billion for eight pieces of metal under the sea. is so dumb. Ukraine drove the whole Russian fleet out of the Black Sea with some homemade drones. Worse, the US is pressing us to commit to spending 3.5 per cent of GDP on defence and to commit to join in any war with China over Taiwan. We are paying for submarines we do not need with money we do not have to fight enemies that we need not provoke. This unreliable US president who does not share our values should cause us to rethink the America alliance. What we need is enough weaponry to ensure that a potential invader would get such a bloodied nose as to deter them - a purely defensive posture. Public finance: Australia's tax system is an inequitable quagmire. People using their labour get taxed around 30 per cent. People with capital earnings pay a lot less or next to nothing. Treasurer Jim Chalmers to his credit has convened a productivity summit. He cited the book Abundance by US journalists Ezra Klein and Derek Thompson which described how notionally progressive environmental and social-cause regulation was clogging the provision of affordable housing. Yes, progressives should be concerned that over-regulation can stifle the very ends that want. But the Abundance was more than that. It also argued that we could have abundance (of cheap or free energy) if over-regulation of the construction of renewables and sabotage by the fossil industry were removed. They argued that the broad masses could also have abundance if the ultra-wealthy paid more tax. Chalmers has also flagged tax reform. It is a good start. We do not want capitalists salivating at the thought of deregulation and ignoring tax reform. We have been there before and there has been no abundance or trickle down for those below. Immigration: Australia should drastically reduce its immigration program. The level of immigration has nothing to do with race because Australia has a non-racial immigration program, so whatever way you change the numbers - up or down - race has nothing to do with it. READ MORE: It is about economics, the environment, and quality of life. In the 2023-24 financial year, Australia's net overseas migration was 446,000 people. This is the main reason we have a housing crisis; congestion; and an infrastructure crisis generally. Our universities are less places to educate and train our people than factories to sell overseas students tickets to permanent residency - headed by CEOs on million-dollar salaries. In summary, Australia has to stop being so dumb and stop giving so much away - untaxed resources; money to the US and British military-industrial complex; tax breaks and avoidance schemes for the uber-wealthy; an out-of-control migrant intake; and allowing the fossil industries to expand and profit as if there is no climate crisis or a cheaper and better renewable alternative. Australia now faces four blindingly obvious national pitfalls which, if not met full on, will cause us to tumble into something resembling what Paul Keating called a banana republic. Keating's was a good wake-up call which worked at the time, and we need another one. The four pitfalls that need an urgent recalibration are as follows. Unsustainable international trade; a wobbly defence-security position; public-finance arrangements that fuel massive inequality and intergenerational unfairness; and out-of-control immigration. Let's outline the festering sores first. International trade: At present Australia exports about $140 billion of low-grade iron ore; $80 billion in LNG; $40 billion worth of coal, three-quarters of which is poor brown coal used to generate electricity. Very little tax is paid, and foreign shareholders get most of the benefit. And we import $30 billion plus in refined fossil fuel. Long-term this is disastrous. As the world realises that there is a sun in the sky that delivers energy free, our coal will become worthless. As the world, ever steel-dependent and energy-aware, realises that low-grade iron ore is not worth the transport costs of importing it, we will have to work out a way to refine it here: use it or lose it. Importing $30 billion worth of fuel is silly when we have the technology and the roof and ground space to generate all the power needed to drive vehicles without any fuel. This transition should happen as quickly as possible. Defence-security: Australia has always been on the apron strings of Britain or the US. As Britain withdrew to its own in 1942 after the fall of Singapore, we turned to the US. Now the US is withdrawing to its own. Neither of them gave two hoots about Australia. Give us your bodies and money for our wars is all they wanted. At present, we are committed to a $350-billion-plus program to develop over more than a decade a handful of nuclear-powered submarines and in the meantime to obtain two or three Virginia-class second-hand ones from the US. Yes, Virginia, there is a Santa Claus, but only for America. We have already paid the US $500 million with no submarine in sight, or ever likely to be. This is because we were dumb enough to sign up to a deal, AUKUS, which allows the US not to deliver any submarines without any penalty through a get-out clause. How many lemons do we have to buy from this used-car salesman (Vietnam, Afghanistan, Iraq) before we realise that we are being dudded and become more self-reliant. Under AUKUS, the British are supposed to design and jointly build the new AUKUS-class nuclear-powered submarine. But Britain is struggling to maintain and replace its nine Astute and Vanguard class nuclear submarines with the new Dreadnought class. Another new class, AUKUS, is more a pipedream than a pipeline. $350 billion for eight pieces of metal under the sea. is so dumb. Ukraine drove the whole Russian fleet out of the Black Sea with some homemade drones. Worse, the US is pressing us to commit to spending 3.5 per cent of GDP on defence and to commit to join in any war with China over Taiwan. We are paying for submarines we do not need with money we do not have to fight enemies that we need not provoke. This unreliable US president who does not share our values should cause us to rethink the America alliance. What we need is enough weaponry to ensure that a potential invader would get such a bloodied nose as to deter them - a purely defensive posture. Public finance: Australia's tax system is an inequitable quagmire. People using their labour get taxed around 30 per cent. People with capital earnings pay a lot less or next to nothing. Treasurer Jim Chalmers to his credit has convened a productivity summit. He cited the book Abundance by US journalists Ezra Klein and Derek Thompson which described how notionally progressive environmental and social-cause regulation was clogging the provision of affordable housing. Yes, progressives should be concerned that over-regulation can stifle the very ends that want. But the Abundance was more than that. It also argued that we could have abundance (of cheap or free energy) if over-regulation of the construction of renewables and sabotage by the fossil industry were removed. They argued that the broad masses could also have abundance if the ultra-wealthy paid more tax. Chalmers has also flagged tax reform. It is a good start. We do not want capitalists salivating at the thought of deregulation and ignoring tax reform. We have been there before and there has been no abundance or trickle down for those below. Immigration: Australia should drastically reduce its immigration program. The level of immigration has nothing to do with race because Australia has a non-racial immigration program, so whatever way you change the numbers - up or down - race has nothing to do with it. READ MORE: It is about economics, the environment, and quality of life. In the 2023-24 financial year, Australia's net overseas migration was 446,000 people. This is the main reason we have a housing crisis; congestion; and an infrastructure crisis generally. Our universities are less places to educate and train our people than factories to sell overseas students tickets to permanent residency - headed by CEOs on million-dollar salaries. In summary, Australia has to stop being so dumb and stop giving so much away - untaxed resources; money to the US and British military-industrial complex; tax breaks and avoidance schemes for the uber-wealthy; an out-of-control migrant intake; and allowing the fossil industries to expand and profit as if there is no climate crisis or a cheaper and better renewable alternative.
ABC News
20-06-2025
- Business
- ABC News
Jim Chalmers wants a fight on tax, just like his 'brawler' hero Paul Keating
For those hoping Labor might use its landslide victory to be more ambitious, Jim Chalmers came to the press club with a message: game on. His speech was overshadowed by dramatic developments on the other side of the world, and buried under the dull heading of productivity and tax reform. But there was no mistaking the impression that Chalmers is emboldened by the election result and wants to seize his moment. The speech was light on specifics but lofty in aspiration. The treasurer was explicit that he wanted to use August's reform roundtable to make a lasting change to the tax system — to pick a fight and win it, like his "brawler statesman" hero Paul Keating. Chalmers is several steps ahead of his more cautious prime minister, whose own press club speech about economic reform last week was more grounded in talk of "win-wins" and incremental progress. But creative tension between treasurer and prime minister is the hallmark of all consequential governments, as with Hawke and Keating, or Howard and Costello. And economic reform — especially tax — is what those governments are remembered for, just as the political graveyard is littered with infamous tax failures like Gillard's carbon tax, Hewson's "fightback" and Shorten's negative gearing and franking credits. Tax matters to people, even if its finer details can make the eyes glaze over. So it is no small matter that the treasurer is standing at an open windowsill of opportunity and declaring he wants to jump through it. As one Labor frontbencher in the room remarked, it was the kind of speech the Labor faithful had waited 15 years to hear. For now, reaction from commentators has ranged from ambivalence to outright scepticism — "Rome not yet built on day one", read the opinion pages. And it's true that ambition is often thwarted by the cold light of reality, because anything worth doing on tax is hard to do. But even the whisper of a chance is enough for economists to prick up their ears after years of relentless caution and "safe" incrementalism. And there is much that could be done. For all the rancour, economists, unions, business and welfare advocates agree a lot about what's wrong with the status quo. There are always quibbles, but the broad collected wisdom is as follows: First, Australia taxes working people too much. That picture gets even worse if you factor in transfers (welfare and subsidies), which are below the poverty line for those on the lowest incomes and effectively impose extra taxes on middle earners, because the payments are withdrawn as you earn more. The picture is worse again if you factor in bracket creep — the fact that tax settings are not adjusted for inflation, meaning people pay more tax over time. Second, our tax system is wildly inconsistent in how it treats different types of income. A couple with no assets, both on the minimum wage, could pay more tax than a couple with three homes, a share portfolio, and hundreds of thousands in annual income. In fact, without needing to bend reality too much, it's plausible that the second couple could pay no tax at all. As well as the obvious inequities, these inconsistencies are inefficient, encouraging people to park their money in certain places (especially super and property) over others. At the same time, there are many reasons to expect we will need to raise more tax over time, in part because as people live longer they will require more care. And while there is lively debate over whether some government spending can be cut, there is pressure to spend more in several areas, much of it with strong public support. So if we want to be less reliant on taxing wages, we would need to consider other ways to raise money. Increasing taxes on consumption (GST) or land are among the options that would be more efficient, though not necessarily more equitable. Finally, all of this creates an intergenerational problem, because in the coming years there will be more retirees for every person of working age, piling the tax burden onto the shoulders of the young, a problem which gets worse the longer we neglect it. To summarise: the wrong type of tax, designed badly, and not enough of it, to the detriment of working people and young people, and distorting the economy. And that's before even mentioning corporate tax, fuel tax or cigarette tax — all of which are the subject of their own lively debates. All of that is enough to be overwhelming. But a wealth of problems means a wealth of possible answers. All of the "big ticket" items that feature prominently in political debate — negative gearing, capital gains tax, super tax, raising the GST, ending bracket creep, taxing land — are efforts to address one or another of these agreed shortcomings of the tax system. While Chalmers insists he is happy for all of these to be on the table and is keen not to rule things out, his press club appearance — where journalists tried valiantly to tempt him to do just that — left the impression he wants to avoid ideas with too much baggage. If he chose negative gearing, he would be accused of reheating leftovers and presented with a highlight reel of all the times he or the PM has promised not to revisit it, with the Coalition likely opposed and the Greens likely taking credit. If he chose the GST, he would risk creating "sticker shock" and be the treasurer who delivers a temporary price rise on everything, an option unlikely to appeal so soon after a nasty bout of inflation, especially since the states would get to keep all the money. And if he chose to go further on super tax concessions, he would embolden the scare campaign already amassing against his current push to lift the tax on earnings, which visibly irritates him every time he is asked about it. None of these seems especially likely. But if the treasurer is searching for a defining reform, there are options on the shelf with more dust but fewer enemies. Perhaps the most popular among economists — and yet still fairly obscure to the general public — is a dual income tax. That tax, common in Scandinavia, treats wages and salaries ("active" or "labour" income) differently to investments and capital gains ("passive" or "savings" income). Australia currently treats some investment income the same way as wages but other types completely differently. A dual tax could close loopholes and treat investment more consistently on the one hand, and lower taxes on wage earners on the other hand, while still being revenue neutral or even raising money. It's an idea with a long lineage, discussed at length in the famous Henry tax review in the early days of the Rudd government. Ken Henry, the treasury secretary who gave that review its name and who helped Chalmers with a draft of his press club speech this week, has become something of a "godfather of tax reform", and his hefty report still carries authority. But there's little to show for that reputation — 15 years on, politicians have intoned their reverence for the Henry review while politely ignoring almost all its recommendations. The reason? Because there is no such thing as meaningful tax reform that does not create both winners and losers. And for some time now, governments skirting on the edges of electoral defeat have been nervous about losers, preferring instead to promise higher spending and lower taxes. The Morrison government made an artform of this "double carrot", carefully designing its tax cuts to ensure no taxpayer was ever made worse off by even a cent. For this it was rewarded, winning a 2019 election against a Labor opposition with a substantial and controversial tax reform agenda who told the losers that if they didn't like it, they could vote for someone else, which they did. That's the price tag of reform. But with its colossal majority, the Albanese government could decide it can afford it. Chalmers, at least, thinks so. Perhaps his most pointed comment this week was that he did not believe the media narrative that Labor was assured of a third term. Translation: time is of the essence.
AU Financial Review
15-06-2025
- Business
- AU Financial Review
Keating: ‘CBA was flying on one wing when I became Treasurer'
When Paul Keating saw the front page headline CBA scales $300b peak, he couldn't help himself. The bank had just become the first ASX-listed company to break through that level of market capitalisation and Keating wanted to claim his part in the story. He called up The Australian Financial Review to summon two banking writers to his Sydney office for a history lesson. The plush room on the first floor of a mansion in Potts Point is filled with his extensive collection of statues, paintings and ornaments. Fittingly, for the subject of the day, four pillars line the entrance. Old newspaper clippings are scattered across a wooden desk, with dozens of paragraphs highlighted in green.
